"I am out there looking for "The Rainmaker". I am willing to speculate at this time that Lockheed Martin Corp. (LMT) will need to purchase Oshkosh Corp., (Symbol OSK) (Oshkosh Defense) because it is much easier than suing the Pentagon."

Dow Jones Industrial Average 17,520.49 (Down)  3:25 PM EST on 12/28/2015

"The Rainmaker" Moravian Tiles Works, PA.

Lockheed Martin Corp. is fit to be tied. First in October, Lockheed Martin and partner Boeing lost a $55 Billion Air Force bomber contract to Northrop Grumman. 

Lockheed Martin has filed suit along with its partner Boeing over losing the contract for the next-generation Long Range Strike Bomber to Northrop Grumman. That contract has an estimated value of approximately $80 billion.Lockheed Martin has also filed a lawsuit against the U.S. Department of Defense over losing the contract for next-generation combat vehicles to Oshkosh Defense.

The U.S. Army plans to procure 55,000 Joint Light Tactical Vehicles for both the Army and the U.S. Marine Corps through 2040, and is expected to spend approximately $30 billion funding the production by Oshkosh according to Bloomberg.

That is a lot of sales for Lockheed Martin, the world' largest defense company, not to be reporting to their fat-cat stock holders, not to mention the huge amount of the money spent on all the lawyers. 

The first part of the contract is worth $6.7 Billion , Oshkosh Defense News and the DOD just removed the stop work order for Oshkosh to start the build in 2016.

Here is where "The Rainmaker" comes in.  Oshkosh Corp. (Symbol OSK, $38.87) whole stock capitalization of the company is currently only $2.98 Billion dollars.  Lockheed Martin could just buy the whole company probably with an offer of $5 or $6 Billion dollars just to get Oshkosh defense.  They could make an offer at $65 - $70 a share and still be well ahead of the  game. It just seems like an obvious thing to do to me. Heck, they could even sell off the other parts of the truck manufacturing to Navistar or PACCAR. 

So my first speculative choice for 2016 is to own shares of Oshkosh Corp. (OSK) and then to see what happens. I don't think Lockheed Martin has much of a chance suing the Pentagon and winning. 

Don't feel bad for Lockheed Martin though, they get plenty of military contract builds.  They just want all the contracts to go to them because they are the big dog on the street!

So pick up some shares of OSK to start your new 2016 year. You get a 1.96% dividend while you wait for the "Rainmaker" to happen and you will own at worst a $39 a share company that is going to earn $3.52 per share in 2016. Not too shabby either way it goes.

Have a great New Year's Eve party and smoke some cigars, just like the fat-cats at Lockheed Martin. It is good to get one over on the big dog!

Freewilly

"We're going to the mattresses" as they said in the movie "The Godfather". Not to stick our cash in them, (the mattress), but to get a little more strategic and defensive as the FED goes to raise interest rates"

Dow Jones Industrial Average 17265.21 (Way Down) Week ending 12-11-2015

Clemenza make the red sauce. We are going to the mattresses! We need to be somewhere where it is safe from this crazy stock market. Need to hide out for awhile.

Marty Zweig's voice in the back of my head, 

       "Don't fight the FED!"

These are perilous times in the stock market. Where ETF's sell off good stocks, bad stocks, whatever stocks, regardless of how the companies are doing, just to raise cash. Then there is Third Avenue Management junk bond fund. In a conference call on Friday, Third Avenue said it would bar investors from getting their money back! Carl ICann, activist investor, is calling the high yield junk bond market a "power keg", waiting to explode with a lack of liquidity or credit available. You starting to get the picture? High yield junk bond holders sleep with the fishes.


Then there is Janet Yellin out there, like
Virgil "The Turk" Sollozzo , about to raise interest rates and put the first bullet in an already faltering economy for jobs and retail sales that are nowhere to be seen.
So what is an investor to do?

You carefully and slowly need to do some value investing.



After the sell-off on Friday, I bought some shares in Johnson and Johnson (Symbol JNJ, $101.60) with a 3% dividend and a forward PE of 15.85 and a Return on Equity of 21%. These are the type of investments you will need to hold in 2016. Shoot for 15% combined gains with the dividend instead of shooting for 40% returns and ending up face down in a salt marsh in New Jersey.

So you will have a nice Christmas dinner with the Family. You'll eat some pasta, drink a little red wine, maybe buy some Time Warner, (Symbol TWX, $65.47) with a forward PE of 12.42, a PEG Ratio of 0.97, and a Return on Equity of 19.30%. This stock TWX, trading at just 2.24 times book ,will give you ownership of HBO, so you can watch all the gangster movies that you want. This stock has been beat up because of un-bundling in the cable industries, but it has been way overdone at this point. Besides, they have already spun Time Warner Cable (TWC) out in to a separate stock.

But if you really want to be singing sweet tunes like Johnny Fontane in the Godfather, then there is only one stock you need buy, Apple Inc.(Symbol AAPL, $113.18). This company is trading at a forward PE of 10.71 and should be trading at $200.00 a share. The only thing holding this one back is its sheer size. It should trade at a Trillion dollar market capitalization. It has a current dividend of 1.86%. It has spent this year treading water and building up more intrinsic value. 42.90% Return of Equity. A PEG Ratio of 0.80.


As of July 2015, Apple Inc. has $203 Billion dollars on its balance sheet. AAPL can pick and choose what new businesses it wants to go into including automotive software, movie streaming and TV software applications, Watch and personal health applications business, virtual reality software applications, Apple cash and payment systems with the I-Phone. You own this one and you can sleep like a baby at night.

It is 70 degrees here in Pennsylvania, USA and you are supposed to be out Christmas shopping. I would avoid most of the retail stocks here, (except for Apple of course, they have brick and mortar stores too!)
All the best,

Freewilly